NEUTRAL - 2QFY20 - HDFC...Colgate-Palmolive (India) NEUTRAL Re-rating is unwarranted Colgate’s 2Q performance was weaker than anticipated. Company has arrested market share decline

RESULTS REVIEW 2QFY20 25 OCT 2019

Colgate-Palmolive (India) NEUTRAL

Re-rating is unwarrantedColgate’s 2Q performance was weaker than anticipated. Company has arrested market share decline but that is only half the job. Oral care category growth lags sector growth and hence Colgate needs to gain share to justify re-rating in the stock. We cut EPS by 1-3% and value the co. at 35x on Sep-21 EPS, arriving at a TP of Rs 1,400. Maintain NEUTRAL.

HIGHLIGHTS OF THE QUARTER Revenue grew by 4.5% (vs. exp. of 5.5%) driven entirely

by volume growth. Volume growth was sluggish given (a) Slowdown in rural (now trailing urban), (b) Absence of share gains despite 27% growth in A&P and (c) Slow-moving category growth (trails FMCG sector by 2-3%). Competitive intensity remains high particularly in LUPs (Rs 10/pack).

Naturals growth has now tapered to mid-teens from 25-30% range as it has attained a meaningful share (>25% mix in oral care category). Within naturals, Colgate has gained market share (8.1% in CY18 vs. 6.5-7% in CY17) led by Swarna Vedshakti and re-launch of Colgate Salt. Colgate has recently launched Colgate Charcoal to capitalize on naturals fad.

Premium segment (4% mix vs. 8% mix earlier) has now returned to growth but is not enough to compensate for

moderation in growth in other segments. Co. has re-launched Colgate Total to capitalize on this trend.

GM were flat as co reinvested benefits from benign commodity inflation into higher promotions. A&P/Other expenses grew by 27/-1% which resulted in 2% de-growth in EBITDA (vs. exp of 7%). New management’s focus is on spending aggressively on A&P (~14% of sales) at the cost of margins to drive market share gains. Lower corp. taxes resulted in 24% growth in APAT to Rs 2.44bn (exp Rs 2.65bn).

STANCE Colgate’s market share has largely stabilized but we still don’t see signs of gaining meaningful share anytime soon. As a category leader, Colgate needs to drive category growth at a time when natural’s fad is moderating. New management (Ram Raghavan - MD and Mukul Deoras – India chairman) keeps us interested in the story. Ram began his career as a management trainee with Colgate India in 1997. His recent experience as the head of innovation center at Colgate-Palmolive LATAM is exactly what Colgate India needs i.e. product excitement and diversification. Thereby, we model revenue/EBITDA CAGR of ~9/13% over FY20-22E. We don’t expect a re-rating in the stock owing to modest earnings expectation. We maintain NEUTRAL.

Financial Summary YE March (Rs mn) 2QFY20 2QFY19 YoY (%) 1QFY20 QoQ (%) FY18 FY19 FY20E FY21E FY22E Net Revenues 12,218 11,680 4.6 10,849 12.6 41,880 44,646 47,655 51,978 56,929 EBITDA 3,230 3,296 (2.0) 2,998 7.7 11,125 12,361 13,223 14,992 16,991 APAT 2,441 1,964 24.3 1,691 44.3 6,816 7,502 8,784 10,138 11,643 Diluted EPS (Rs) 9.0 7.2 24.3 6.2 44.3 25.0 27.6 32.3 37.2 42.8 P/E (x) 62.5 56.8 48.5 42.0 36.6 EV / EBITDA (x) 37.9 34.1 31.7 27.7 24.2 Core RoCE (%) 64.4 67.2 74.4 83.3 96.5

Source: Company, HDFC sec Inst Research

INDUSTRY FMCG CMP (as on 24 Oct 2019) Rs 1,565 Target Price Rs 1,400 Nifty 11,583 Sensex 39,020 KEY STOCK DATA Bloomberg CLGT IN No. of Shares (mn) 272 MCap (Rs bn) / ($ mn) 426/5,988 6m avg traded value (Rs mn) 652 STOCK PERFORMANCE (%) 52 Week high / low Rs 1,590/1,075 3M 6M 12M Absolute (%) 35.4 29.6 41.2 Relative (%) 32.3 29.7 26.5 SHAREHOLDING PATTERN (%) Jun-19 Sep-19 Promoters 51.00 51.00 FIs & Local MFs 10.26 11.37 FPIs 15.14 15.46 Public & Others 23.60 22.17 Pledged Shares (% of total shares) - -

Source : BSE

Naveen Trivedi [email protected] +91-22-6171-7324

Siddhant Chhabria [email protected] +91-22-6171-7336

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

COLGATE-PALMOILIVE: RESULTS REVIEW 2QFY20

Quarterly Financials Particulars (Rs mn) 2QFY20 2QFY19 YoY (%) 1QFY20 QoQ (%) FY19 FY18 YoY (%) Net Revenue 12,218 11,680 4.6 10,849 12.6 44,624 41,880 6.6 Material Expenses 4,308 4,115 4.7 3,704 16.3 15,586 14,899 4.6 Employee Expenses 819 764 7.2 835 (1.9) 2,959 3,059 (3.3) ASP Expenses 1,758 1,389 26.5 1,513 16.2 5,647 5,268 7.2 Other Operating Expenses 2,104 2,116 (0.6) 1,799 16.9 8,072 7,528 7.2 EBITDA 3,230 3,296 (2.0) 2,998 7.7 12,361 11,125 11.1 Depreciation 504 398 26.6 499 1.1 1,592 1,565 1.7 EBIT 2,726 2,897 (5.9) 2,500 9.0 10,769 9,560 12.6 Other Income 86 86 (0.1) 152 (43.1) 377 387 (2.6) PBT 2,812 2,984 (5.8) 2,651 6.1 11,146 9,947 12.1 Exceptional - - na - na 305 (117) PBT after exceptional 2,812 2,984 (5.8) 2,651 6.1 11,451 9,830 16.5 Tax 347 1,020 (66.0) 937 (63.0) 3,670 3,097 18.5 RPAT 2,441 1,964 24.3 1,691 44.3 7,756 6,734 15.2 Adjustments - - na - na (254) 83 na APAT 2,441 1,964 24.3 1,691 44.3 7,502 6,816 10.1 EPS (adjusted) 9.0 7.2 24.3 6.2 44.3 27.6 25.1 10.1 Source: Company, HDFC sec Inst Research

Margin Analysis Particulars 2QFY20 2QFY19 YoY (bps) 1QFY20 QoQ (bps) FY19 FY18 YoY (bps) Material Expenses % Net Sales 35.3 35.2 2 34.1 112 34.9 35.6 (65) Employee Expenses % Net Sales 6.7 6.5 16 7.7 (99) 6.6 7.3 (67) ASP Expenses % Net Sales 14.4 11.9 250 13.9 44 12.7 12.6 8 Other Operating Expenses % Net Sales 17.2 18.1 (90) 16.6 63 18.1 18.0 11 EBITDA Margin (%) 26.4 28.2 (178) 27.6 (120) 27.7 26.6 113 Tax Rate (%) 12.3 34.2 (2,186) 35.3 (2,302) 32.0 31.5 55 APAT Margin (%) 20.0 16.8 317 15.6 439 17.4 16.1 130 Source: Company, HDFC sec Inst Research

Revenue growth of 4.5% (exp 5.5%) was driven by 4% volume growth (4% exp.) Colgate’s market share has begun to stabilize Oral care category is growing at ~4% volume growth Gross margins were flat owing higher promotions Co is aggressively investing in A&P spend to drive market share gains APAT growth was driven by lower corp tax rates

Page | 2


Net Revenue Volume Growth

Source: Company, HDFC sec Inst Research Note: 1QFY16-4QFY16 growth is based on old AS


Gross Margin Change EBITDA Margin Change

Source: Company, HDFC sec Inst Research Note: 1QFY16-4QFY16 change is based on old AS

Source: Company, HDFC sec Inst Research Note: 1QFY16-4QFY16 change is based on old AS

Volume growth was sluggish given (a) Slowdown in rural (now trailing urban), (b) Absence of share gains despite 27% growth in A&P and (c) Slow-moving category growth (trails FMCG sector by 2-3%). Gross margins remain under pressure as promotion intensity remains high

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

25.0

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1QFY

172Q

FY17

3QFY

174Q

FY17

1QFY

182Q

FY18

3QFY

184Q

FY18

1QFY

192Q

FY19

3QFY

194Q

FY19

1QFY

202Q

FY20

Net Sales YoY Growth - RHS

(Rs mn) (%)

6 4

(12)

(3)(5)

(1)

12

4 4 7 7

5 4 4

(15)

(10)

(5)

-

5

10

15

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

(%)

139 91 76

142 108

41

130

304 255

136

(5)

(110)

(5) (2)

(210)

(100)

10

120

230

340

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

(bps)

(105)(35)(47)(21)

183 171

286

464 436

51 127

(128)

59

(178)(300)

(50)

200

450

700

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

(bps)

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Employee Expense Advertising Expense



Gross Margin EBITDA Margin

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Colgate has rationalised its other expenses and is investing aggressively in A&P

16

26

(1)

2

(2)

13 15

(1)

3

(7) (5) (3)

11 7

4.0

5.0

6.0

7.0

8.0

(25)

(10)

5

20

35

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

Employee Gr. (%) Employee (% of sales) - RHS(%)

24 28

(21)

24

(8) (7)

44

(0)

0

17

4 9 5

27

-2 4 6 8 10 12 14 16 18

(30)

-

30

60

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

Advertising Gr. (%) Advertising (% of sales) - RHS(%)

62.3

63.0

63.9

62.6

63.4

63.4

65.2

65.7

65.9

64.8

65.1

64.6

65.9

64.7

59.0

61.0

63.0

65.0

67.0

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

(%)

20.9

26.0

24.5

23.5

22.7

27.7

27.3

28.2

27.0

28.2

28.6

26.9

27.6

26.4

10.0

15.0

20.0

25.0

30.0

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

(%)

Page | 4


Colgate’s Toothpaste Market Share Colgate’s Toothbrush Market Share

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Market share declines in the last 2 years for Colgate in toothpaste have come from its premium segment (Colgate Sensitive and Colgate Total). The premium segment revenue contribution is at ~4% vs. ~8% earlier Market share has now largely stabilized at ~52% Colgate continued to face intense competition in the naturals segment (25% mix for industry) which is dominated by Dabur and Patanjali (80% combined share)

43.8

45

.8 46

.8

46.6

47

.0

47.4

45.0

45.5

45.1

44

.8

44.6

44

.2

46.6

48

.0

44.9

44

.5

41.0

42.0

43.0

44.0

45.0

46.0

47.0

48.0

49.0

3QFY

164Q

FY16

1QFY

172Q

FY17

3QFY

174Q

FY17

1QFY

182Q

FY18

3QFY

184Q

FY18

1QFY

192Q

FY19

3QFY

194Q

FY19

1QFY

202Q

FY20

(%)

55.3

55

.9

55.7

55

.4

55.1

54

.3

54.0

53

.7

53.4

52

.4

52.5

52

.2

52.2

52

.2 52.8

50.0

51.0

52.0

53.0

54.0

55.0

56.0

57.0

4QFY

161Q

FY17

2QFY

173Q

FY17

4QFY

171Q

FY18

2QFY

183Q

FY18

4QFY

181Q

FY19

2QFY

193Q

FY19

4QFY

191Q

FY20

2QFY

20

(%)

Page | 5


Toothpaste Market Share

Source: Company, HDFC sec Inst Research Toothbrush Market Share


Sharp decline in toothpaste market share during CY15-18 has started stabilizing Toothbrush exit volume market share in Mar’19 was at ~48%

33.438.4 38.0 35.9

39.842.3 42.8 44.4

47.3 45.1

11.4 11.914.8

17.8 18.8 18.4 18.2 17.414.6 14.2

5.9 6.4 7.2 7.2 6.7 7.5 7.9 9.3 10.7 11.00.0

10.0

20.0

30.0

40.0

50.0

60.0

CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17

Colgate Competitor 1 Competitor 2(%)

48.8 49.452.2 53.3 52.7 54.5 56.1 56.8 57.2 55.5 53.6 52.4

25.1 24.6 22.8 22.6 23.3 23.5 22.8 21.7 19.8 19.2 17.7 17.3

11.9 12.2 12.9 13.7 14.8 14.0 13.4 13.4 14.0 15.3 15.415.1

0.0 0.1 0.4 0.6 1.2 2.9 6.8 8.6

0.0

10.0

20.0

30.0

40.0

50.0

60.0

CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18

Colgate Competitor 1 Competitor 2 Competitor 3(%)

Page | 6


Per Capita Consumption


Assumptions

FY18 FY19 FY20E FY21E FY22E Toothpaste revenue growth 7.4 6.8 6.3 8.6 9.1 Toothpaste volume growth 2.5 5.8 5.3 7.0 7.0 GM (%) 64.4 65.1 65.4 66.0 66.5 Employee (% of sales) 7.3 6.6 6.8 6.6 6.5 ASP (% of sales) 12.6 12.7 13.8 13.7 13.6 Distribution (% of sales) 3.1 3.0 3.0 3.0 3.0 Royalty (% of sales) 4.9 4.9 4.9 4.9 4.9 Other expenses (% of sales) 9.9 10.2 9.1 8.9 8.6 EBITDA Margin (%) 26.6 27.7 27.7 28.8 29.8 Tax Rate (%) 31.5 32.1 25.2 25.2 25.2 Source: Company, HDFC sec Inst Research

603

458

312

212158

0

100

200

300

400

500

600

700

Brazil USA Philipines China India

Page | 7


Change In Estimates

NEW OLD Change (%)

FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E Net Sales 47,655 51,978 56,929 47,655 51,978 56,929 0.0% 0.0% 0.0% EBITDA 13,223 14,992 16,991 13,453 14,957 16,767 -1.7% 0.2% 1.3% PAT 8,784 10,138 11,643 9,045 10,205 11,541 -2.9% -0.7% 0.9% EPS 32.3 37.2 42.8 33.2 37.5 42.4 -2.9% -0.7% 0.9% Source: HDFC sec Inst Research Peer Set Comparison

Company MCap

(Rs bn)

CMP (Rs) Reco. TP

(Rs)

EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)

FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E

HUL 4,544 2,133 NEU 2,017 28.1 34.3 42.2 75.8 62.2 50.6 51.2 46.3 35.7 248.6 38.7 28.0 ITC 2,790 249 BUY 368 10.4 12.9 14.0 23.9 19.2 17.8 15.1 13.7 12.2 39.2 46.3 49.1 Nestle 1,448 15,020 NR 13,640 167.1 233.6 278.1 89.9 64.3 54.0 52.1 44.7 38.3 82.1 114.7 137.3 Dabur 828 470 BUY 490 8.2 9.5 11.4 57.3 49.3 41.2 46.1 39.6 34.2 50.1 52.9 58.3 Britannia 788 3,283 BUY 3,594 48.1 58.6 71.9 68.3 56.0 45.7 44.7 40.5 33.1 39.2 43.1 49.8 Marico 510 395 NEU 400 7.2 8.7 10.4 54.8 45.4 38.0 39.7 31.9 27.7 48.8 47.4 53.4 Colgate 426 1,565 NEU 1,400 27.6 32.3 37.2 56.8 48.5 42.0 34.1 31.7 27.7 67.2 74.4 83.3 Emami 156 336 BUY 468 11.0 13.0 14.7 30.5 25.9 22.9 20.6 18.2 15.9 21.5 26.5 32.0 Jub. Food 203 1,540 BUY 2,134 24.1 33.2 42.1 63.9 46.4 36.5 32.8 28.8 22.4 45.8 35.5 25.8 United Spirits 442 609 BUY 754 10.2 11.8 16.9 59.5 51.6 36.0 34.4 28.7 23.1 15.8 18.2 22.8 Radico Khaitan 42 312 BUY 496 14.1 17.8 21.5 22.1 17.5 14.5 12.8 11.3 9.5 11.5 13.8 15.3 Source: HDFC sec Inst Research

We cut EPS by ~1-3% to factor slower than expected recovery in FY20.

Page | 8

COLGATE-PALMOLIVE : RESULTS REVIEW 2QFY20

Income Statement (Rs mn) FY18 FY19 FY20E FY21E FY22E Net Revenues 41,880 44,646 47,655 51,978 56,929 Growth (%) 5.2 6.6 6.7 9.1 9.5 Material Expenses 14,901 15,586 16,054 17,405 18,838 Employee Expense 3,059 2,959 3,214 3,505 3,839 ASP Expense 5,268 5,647 6,576 7,121 7,742 Distribution Expense 1,315 1,339 1,430 1,559 1,708 Other Expenses 6,211 6,755 7,158 7,395 7,811 EBITDA 11,125 12,361 13,223 14,992 16,991 EBITDA Growth (%) 17.8 11.1 7.0 13.4 13.3 EBITDA Margin (%) 26.6 27.7 27.7 28.8 29.8 Depreciation 1,565 1,592 1,880 2,080 2,280 EBIT 9,560 10,769 11,343 12,912 14,711 Other Income (Inc. EO Items) 270 682 492 736 953 Interest - 25 96 101 105 PBT 9,830 11,426 11,739 13,547 15,559 Total Tax 3,097 3,670 2,955 3,410 3,916 RPAT 6,734 7,756 8,784 10,138 11,643 Adjustments (83) 254 - - - Adjusted PAT 6,816 7,502 8,784 10,138 11,643 APAT Growth (%) 18.0 10.1 17.1 15.4 14.9 Adjusted EPS (Rs) 25.0 27.6 32.3 37.2 42.8 EPS Growth (%) 18.0 10.1 17.1 15.4 14.9


Balance Sheet (Rs mn) FY18 FY19 FY20E FY21E FY22E SOURCES OF FUNDS Share Capital - Equity 272 272 272 272 272 Reserves 14,974 14,614 18,157 21,422 25,135 Total Shareholders’ Funds 15,246 14,886 18,429 21,695 25,408 Long Term Debt - 777 777 777 777 Short Term Debt - - - - - Total Debt - 777 777 777 777 Net Deferred Taxes 355 309 309 309 309 Other Non-current Liabilities & Provns 209 201 201 201 201

TOTAL SOURCES OF FUNDS 15,811 16,172 19,715 22,981 26,694 APPLICATION OF FUNDS Net Block 11,460 11,909 12,029 11,949 11,670 CWIP 1,586 1,987 1,987 1,987 1,987 Other Non-current Assets 1,978 1,903 2,491 2,721 2,982 Total Non-current Assets 15,024 15,798 16,507 16,657 16,639 Inventories 2,267 2,486 2,657 2,900 3,177 Debtors 2,010 2,098 2,239 2,442 2,675 Other Current Assets 1,465 1,611 1,772 1,950 2,145 Cash & Equivalents 4,873 4,689 7,769 11,113 15,120 Total Current Assets 10,615 10,884 14,438 18,405 23,116 Creditors 6,145 6,132 6,539 7,024 7,585 Other Current Liabilities & Provns 3,683 4,378 4,691 5,057 5,476 Total Current Liabilities 9,828 10,510 11,230 12,081 13,061 Net Current Assets 788 374 3,208 6,324 10,055 TOTAL APPLICATION OF FUNDS 15,811 16,172 19,715 22,981 26,694


Page | 9


Cash Flow Statement (Rs mn) FY18 FY19 FY20E FY21E FY22E Reported PBT 9,947 11,426 11,739 13,547 15,559 Non-operating & EO Items 81 - - - - Interest Expenses (290) 25 96 101 105 Depreciation 1,565 1,592 1,880 2,080 2,280 Working Capital Change (889) 620 (207) 192 235 Tax Paid (3,474) (3,670) (2,955) (3,410) (3,916) OPERATING CASH FLOW ( a ) 6,939 9,992 10,553 12,510 14,263 Capex (2,087) (2,442) (2,000) (2,000) (2,000) Free Cash Flow (FCF) 4,852 7,550 8,553 10,510 12,263 Investments (273) - - - - Non-operating Income 287 (312) (132) (189) (217) INVESTING CASH FLOW ( b ) (2,073) (2,754) (2,132) (2,189) (2,217) Debt Issuance/(Repaid) - 777 - - - FCFE 4,866 8,016 8,421 10,320 12,046 Share Capital Issuance - - - - - Dividend (3,705) (7,862) (5,241) (6,872) (7,930) Others (92) (298) (100) (104) (108) FINANCING CASH FLOW ( c ) (3,798) (7,382) (5,341) (6,976) (8,039) NET CASH FLOW (a+b+c) 1,068 (144) 3,080 3,344 4,007 EO Items, Others (550) 41 - - - Closing Cash & Equivalents 4,562 4,377 7,457 10,801 14,808


Key Ratios FY18 FY19 FY20E FY21E FY22E PROFITABILITY (%) GPM 64.4 65.1 66.3 66.5 66.9 EBITDA Margin 26.6 27.7 27.7 28.8 29.8 EBIT Margin 22.8 24.1 23.8 24.8 25.8 APAT Margin 16.3 16.8 18.4 19.5 20.5 RoE 48.7 49.8 52.7 50.5 49.4 RoIC (or Core RoCE) 64.4 67.2 74.4 83.3 96.5 RoCE 47.9 47.9 49.8 48.2 47.5 EFFICIENCY Tax Rate (%) 31.5 32.1 25.2 25.2 25.2 Fixed Asset Turnover (x) 2.1 2.0 2.0 2.0 2.0 Inventory (days) 19.8 20.3 20.4 20.4 20.4 Debtors (days) 17.5 17.2 17.2 17.2 17.2 Other Current Assets (days) 12.8 13.2 13.6 13.7 13.8 Payables (days) 53.6 50.1 50.1 49.3 48.6 Other Current Liab & Provns (days) 32.1 35.8 35.9 35.5 35.1 Cash Conversion Cycle (days) (35.6) (35.3) (34.9) (33.6) (32.5) Net D/E (x) (0.3) (0.3) (0.4) (0.5) (0.6) Interest Coverage (x) na na na na na PER SHARE DATA (Rs) EPS 25.0 27.6 32.3 37.2 42.8 CEPS 30.8 33.4 39.2 44.9 51.1 Dividend 24.0 16.0 21.0 24.2 27.8 Book Value 56.0 54.7 67.7 79.7 93.3 VALUATION P/E (x) 62.5 56.8 48.5 42.0 36.6 P/BV (x) 27.9 28.6 23.1 19.6 16.8 EV/EBITDA (x) 37.9 34.1 31.7 27.7 24.2 EV/Revenues (x) 10.1 9.5 8.8 8.0 7.2 OCF/EV (%) 1.6 2.4 2.5 3.0 3.5 FCF/EV (%) 1.2 1.7 2.0 2.5 2.9 FCFE/Mkt Cap (%) 1.1 1.9 2.0 2.4 2.8 Dividend Yield (%) 1.5 1.0 1.3 1.5 1.8


Page | 10


RECOMMENDATION HISTORY

Rating Definitions BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Date CMP Reco Target 10-Oct-18 1,050 NEU 1,164 29-Oct-18 1,102 NEU 1,163 9-Jan-19 1,311 NEU 1,248

24-Jan-19 1,322 NEU 1,254 10-Apr-19 1,231 NEU 1,260 28-May-19 1,180 NEU 1,227

9-Jul-19 1,164 NEU 1,231 18-Jul-19 1,203 NEU 1,281 22-Sep-19 1,397 NEU 1,412 11-Oct-19 1,497 NEU 1,398 25-Oct-19 1,565 NEU 1,400

1,000

1,100

1,200

1,300

1,400

1,500

1,600

Oct

-18

Nov-

18

Dec-

18

Jan-

19

Feb-

19

Mar

-19

Apr-

19

May

-19

Jun-

19

Jul-1

9

Aug-

19

Sep-

19

Oct

-19

Colgate TP

HDFC securities Institutional Equities Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park, Senapati Bapat Marg, Lower Parel,Mumbai - 400 013 Board : +91-22-6171 7330 www.hdfcsec.com

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